Be clear on Soho, URA tells developers

20131126-st-be-clear-on-soho-ura-tells-developers DEVELOPERS here have been warned to be careful when marketing properties as "small office home office", or Soho units.

They should make it clear to buyers that the term Soho does not refer to any official planning status, said the Urban Redevelopment Authority (URA) in a circular yesterday.

Units marketed as Soho have planning permission for either residential or office use, but not for both, the URA said.

It issued the circular to professional institutes, including the Real Estate Developers' Association of Singapore, after receiving feedback on the issue.

When "Soho" is used in marketing, it usually refers either to small offices, or homes with design elements such as high ceilings aimed at buyers who may work from home.

It is more often used to refer to residential units rather than office ones, said Mr Ku Swee Yong, chief executive of real estate agency Century21.

But as for what exactly a Soho residential unit allows, "the market has been confused for a while already", he said.

Many employees may legitimately do some work from home. What is not usually allowed is running a business out of a home.

Small-scale businesses can be run out of homes only if owners register for the "home-office scheme".

The business must meet guidelines such as not hiring more than two foreign employees.

The URA strongly urged developers to insert a clause stating the approved use of the property in the Sale and Purchase Agreement.

As for all office properties - even if marketed as Soho units - they are not meant for residential use.

Developers should not give a different impression, and "should refrain from using the term 'Soho' for office developments in any of their advertisements".

Far East Organization said it is not marketing any commercial developments under its dedicated 'SO/HO' brand at the moment.

"We support the greater clarity on the use of the 'SOHO' term as set out in the latest circular by the URA," said executive director of property services Chng Kiong Huat.

He added that Far East has "made it a point to highlight" that buyers must comply with regulations if they want to use their residential unit as a home-office.

A call for such clarity was made in April when Mr Daniel Choy wrote to The Straits Times' Forum page, saying the term 'Soho' confuses potential buyers.

His job as a real estate agent is made harder by such confusion, he told The Straits Times yesterday.

He would like developers to be barred from using the term.

Mr Ku sees the circular as aiming "to make our developers a little more disciplined" and raise awareness among agents. But he doubts it will clear the air: "I think the confusion will still go on because there aren't any real punitive measures."

The URA also said developers should "provide estate agents with accurate information".

Regardless of how projects are marketed, agents should be clear on the facts, said Mr Jeffhery Foo, president of the Institute of Estate Agents, Singapore: "There is an onus on us to make such clarifications upfront."

Source: Straits Times, 26 Nov 2013

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URA acts to curb use of 'SoHo' by developers

[SINGAPORE] The Urban Redevelopment Authority (URA) is clamping down on the use of the term "small office home office" (SoHo) for commercial and residential units, as the man on the street may be led to think that such units can be used as homes and offices - whether concurrently or interchangeably.

SoHo is a marketing term which, in reality, does not refer to any specific use or type of development. The planning permission for a residential SoHo unit, for instance, gives it clearance to be used as a home. A separate application has to be made for it to be used as a home-office, and several restrictions apply on the kind of business that can be conducted there.

The liberal use of the "SoHo" label has drawn flak, given that such units tend to be marketed at a higher price, and buyers find out - too late - that they cannot be freely used as a home and an office.

Donald Han, managing director at Chesterton Singapore, said: "A lot of people bought shoebox units on the basis of the developer describing them in their brochures as SoHo. With more shoebox units headed for completion, there could be grouses on the ground when people realise that there is no such thing as SoHo use."

The URA has thus issued a circular to developers and their marketing agents, urging them to make it clear to prospective buyers upfront on the approved use of the development. "Buyers should also find out the approved use of the development before committing to a purchase," said a URA spokeswoman.

Developers who choose to continue marketing their projects under the "SoHo" banner will have to spell out the approved use of the unit in the sale-and-purchase agreement. With residential SoHo units, they must include a clause to specify that the unit is to be used primarily as a home, but that the purchaser can, if he wishes, apply for permission to use the unit as a home-office.

Lee Liat Yeang, a partner at Rodyk & Davidson Real Estate Practice Group, said: "I think URA is concerned that when developers say your unit can be converted to a home office, agents may represent that it can be any kind of office."

Terms and conditions apply under the Home Office Scheme. One of these is that the business should not hire more than two non-resident employees. Businesses not allowed in home-offices include maid agencies, beauty or massage services, commercial schools, sales or marketing businesses, courier services or businesses which cause disruption in the neighbourhood.

Mr Lee said: "Potentially, you can apply for home office use for any residential property. Of course, the nearer you are to town, the more likely it is. But with town centres now split among Woodlands, Jurong, and Paya Lebar, I won't be surprised if people buy a residential unit there and apply to convert it into a home office."

On the commercial front, developers and marketing agents can no longer use the term "SoHo" to market office developments, given that offices are not allowed for residential use.

Mr Lee said this appears to be a clear statement from the URA to discourage developers from using the phrase "SoHo" to market office developments.

The circular issued yesterday came on the back of a string of both residential and commercial developments being marketed under the SoHo banner, such as Far East Organization's residential projects The Siena and The Cape and its commercial project PS100 in Peck Seah Street. All 100 strata office units at PS100 were snapped up over its launch weekend.

That Far East features so prominently in the SoHo space is unsurprising. The group introduced the SoHo concept to Singapore, and unveiled a dedicated Far East SO/HO brand in 2011.

Far East's executive director of property services, Chng Kiong Huat, said the group supports the greater clarity on the use of "SoHo". None of Far East's commercial developments are currently being marketed for sale under the SO/HO brand, although future residential projects that align with the specific brand attributes will continue to be marketed as such.

Mr Chng said: "We have made it a point to highlight to prospective homebuyers the approved use of the relevant units under the Planning Act. Specifically, we take care to highlight to purchasers of our SO/HO properties that they will need to comply with the requisite conditions set out by the relevant authorities should they intend to use their residential unit as a home-office."

Source: Business Times, 26 Nov 2013